Yes, there would probably have to be some kind of exemptions / discounts for universities and / or grad students / postdocs / etc. The trouble is, the more exceptions one sticks in, the more likely the thing is to end up a mess again.

One interesting corollary: the earlier immigration bill specified automatic increases in the numbers of visas whenever the cap was hit. Since companies will take a little while to ramp up on using all those extra H-1Bs anyway, that kind of auto-increase becomes a de-facto lack of a cap. With a fee structure, you could do things like saying, "The cap will increase automatically whenever there are no more visas available for less than, say, $2500" or whatever your threshold happens to be. So no quota increase until people are willing to pay for it.

One other thing: it looks like the data set is for labor certification applications only. LCAs are a prerequisite for getting an H-1B, but it's only part of the process. It's a little confusing: there are maybe 80-100K H-1Bs given out last year, but there are 385,000 or so records in the file. I'm not sure what gives. Maybe you have to get a new LCA when someone's salary changes? Or when they change jobs? I'm not sure why there is such a disparity between the number of LCAs and the number of H-1Bs.

I sent an email to Ron Hira to see if he's got any reaction to the auction idea. Should be interesting to see.